FROM: W. Calvin Horton, Town Manager
SUBJECT: Consideration of Resolution Finding Time Warner Cable Basic Service Tier Rates Consistent with Federal Regulations
DATE: January 9, 2006
Federal regulations allow the Council to review Time Warner Cable Basic Service Tier rates to determine whether such rates are accurately calculated and consistent with applicable rules. The purpose of this memorandum is to provide information about the rates to become effective February 1, 2006.
A resolution is attached, which accepts the cable consultant’s report and finds Time Warner’s proposed rates to be accurately calculated according to FCC rules and regulations.
On October 13, 2005, Time Warner Cable notified us (Attachment 1) of its rates for 2006. The rates for Basic Cable Service for both the Chapel Hill and Durham are not proposed to be changed from the current basic rate. The rates for the total monthly rate are proposed to increase due to changes in the Tier 2 and Digital Tier, both of which are unregulated.
Basic Cable Service Tier rate currently is set at $10.60 a month for Chapel Hill customers and $14.50 a month for Durham customers. This reflects no change from the 2005 monthly rate. However, rates for Tier 2 and the Digital Tier have increased. Durham customers receiving Basic Cable Service, Tier 2 and Digital Tier will see an increase from $61.05 per month in 2005 to $64 per month in 2006. Chapel Hill customers receiving the same three service levels will see an increase from $58.03 to $61.30 per month.
The Basic Cable Service is regulated by the Town. Other cable television services such as Tier 2 and Digital Tier are not currently subject to regulation by either local franchising authorities or the FCC. Basic Cable Service, currently, consists of approximately 22 channels of mainly broadcast stations that are received off the air and public, education and governmental access channels. Tier 2, according to Time Warner Cable, currently consists of approximately 52 channels for both Durham and Chapel Hill. The Digital Tier currently consists of approximately 85 video channels.
Each year, Time Warner furnishes the Town with information about rate changes, which we provide for review to Mr. Adrian Herbst, the Town’s cablevision consultant. Mr. Herbst has reviewed the data to determine whether Time Warner calculated the updated Basic Service Tier rates in a manner consistent with Federal Communications Commission (FCC) guidelines, the Time Warner Social Contract, and the Telecommunications Act of 1996. It is the consultant’s conclusion that the Basic rates are accurately calculated according to the rules of the FCC (Attachment 2).
The Town received a letter dated December 5, 2005 (Attachment 3), from Time Warner Cable to resubmit its FCC Form 1240 and FCC Form 1205 because it had inadvertently mailed an unsigned FCC Form 1240. This was resubmitted, and the company stated that the data reflected in the December 5, 2005, submission was the same as that contained in the October 13, 2005, submission. Time Warner Cable issued a second notice dated December 5, 2005 (Attachment 4), to the Town of its upcoming changes in pricing and channel lineups.
RECOMMENDATION
That the Council adopt the attached resolution, which accepts the consultant’s report and finds Time Warner’s proposed rates to be accurately calculated according to FCC rules and regulations. We also recommend that any comments received tonight be referred to the Manager.
ATTACHMENTS
1. October 13, 2005, Letter (p. 4).
The FCC Forms from Mr. Paul Baccellieri, Vice President, Finance, Time Warner Cable-Raleigh Division. These forms are on file in the Town Clerk’s Office, the Chapel Hill Public Library, and will be posted on the Town website at www.townofchapelhill.org for review.
2. November 22, 2005, Letter and Report from Mr. Adrian Herbst (Re: 2005 Rate Review – Report) (p. 5).
3. December 5, 2005, Letter from Mr. Paul Baccellieri, Vice President, Finance, Time Warner Cable-Raleigh Division (p. 18).
4. December 5, 2005, Letter from Brad Phillips, Vice President, Government and Public Affairs, Time Warner Cable-Raleigh Division (p. 41).